Multiple vendor audits within a single calendar year
An increasing trend for software vendors is to target and audit their clients as a means of generating more revenue. This has become such commonplace that businesses may experience audits from multiple vendors within a single calendar year. During audits, some publishers are applying internal vendor policy as a contractual obligation to extract more money from their customers. When in fact, it is not legally enforceable, much like the Oracle Partitioning Policy.
This was the case with our client. The major retailer was the target of Oracle, IBM, VMware, Microsoft, and Cisco audits. And for this, the retailer chose – and won – with the LicenseFortress team.
At the core of Oracle’s claims against the retailer was the Partitioning Policy
The stressors upon this retailer began with an Oracle audit of one of their subsidiaries. Their investigation into one subsidiary quickly bled into other arms of the company. This audit overreach by Oracle was complicated by the following:
- A large number of subsidiaries and nonprofits operated by the retailer
- Ambiguous language in Oracle contracts that had been in place and used by the retailer for more than twenty years
- Legal issues emanating from Oracle’s assertion that the language ambiguity of the contracts fell in their favor and that the retailer owed them millions
- License issues stemming from subsidiary use of licenses and license use across diverse regions of the globe
The Oracle Partitioning Policy was at the core of Oracle’s claims against the retailer. The intent of this policy is to ensure that Oracle customers are only Oracle software on machines licensed to use that software. However, in their attempt to ramp up revenue, Oracle uses the noncontractual language of their Partitioning Policy to push companies into paying for licenses they don’t need or use. This is the vendor attempting to use internal policy as a contractual obligation.
Under the partitioning policy, they do not recognize soft partitioning. If you have a five-node VMware cluster, Oracle runs on two of those nodes and has never been on the other (2) three nodes. Oracle wants to make you pay for all five nodes retroactively. If that VMware cluster can talk to another cluster with five other nodes, Oracle claims usage for all ten nodes. This is the case even if Oracle isn’t running on any but two active nodes. However, the Oracle Partitioning Policy says that the policy is “not for contractual purposes.” But they will try to leverage the policy against a customer and charge them without a contractual basis. Our global retail client faced these and other challenges surrounding the audit when dealing with Oracle.
LicenseFortress is strategically positioned to help fight and win against non-contractual claims
To help our retail client deal with the noncontractual claims of the Oracle Partitioning Policy in the audit process, the LicenseFortress team leveraged the following internal resources through our audit defense:
- We determined what devices and nodes throughout their vast organization were running Oracle.
- We outlined for the client and Oracle what licenses and fees were contractually necessary.
- We harnessed the legal power of our law firm to demonstrate to Oracle the overreach of their extra-contractual claims against the retailer.
- We utilized our law firm’s extensive experience in dealing with Oracle to produce a “close letter” that prohibited Oracle from reaching back into history and starting up new audits that pre-date the current audit.
- We saved our retail client in the ballpark of $9.6 million by reviewing their use of licenses and optimizing their license use.
The customer saved over $9.6 million in license costs and optimization opportunities
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This case study is based on a customer of LicenseFortress. LicenseFortress takes steps to properly safeguard sensitive and personal information by removing all direct identifiers – e.g., name, location, CSI numbers, etc. This step is taken to protect the identity of our customers.